Owning a home brings both joy and responsibility. Whether you purchase new construction in Pennsylvania or an older home, becoming a property owner is a big step. Don’t let the excitement of becoming a homeowner for the first time make you ignore the nuances and details when obtaining homeowner’s insurance.
Most mortgage lenders require you to get home insurance protection before they agree to finance your home. This coverage becomes an additional financial responsibility, so don’t go out buying precious and luxurious items to fill your new home just yet! Disasters such as thunderstorms, tornadoes, and fires could strike at any time, resulting in a surmountable loss. Ensure you understand your homeowners policy, liability coverage, and the details before the unthinkable happens.
We want to be sure that your new home and personal belongings are covered in the event of a disaster. Here is a list of five important facts about homeowners’ insurance that you should know before purchasing one of our homes.
1. Homeowner’s Insurance Has Different Coverage Levels
Knowing what your homeowner’s coverage entails is vital to consider when buying a homeowners policy. The coverage has different levels. You must understand these levels to ensure you only pay for what you need.
Homeowners’ insurance companies use terms like HO-1 and HO-5 to identify the type of coverage it entails. Some standard coverage levels include the following:
- HO-2 covers 16 named perils listed on the homeowners policy, such as lightning or fire, explosions, smoke damage, theft, and vandalism.
- HO-3 protects you against all risks except ones excluded in that policy. Risks that may be excluded include freezing pipes and systems, theft when the dwelling is under construction, and government and association actions.
- HO-4 is renters’ insurance and doesn’t apply to most people buying a home.
- HO-5 is more comprehensive homeowners’ insurance but still comes with limitations. Homeowners’ policies almost never cover floods and earthquakes. If you are in a flood zone, you may need a separate flood insurance policy.
- HO-6 is condo insurance if you own a condo.
- HO-7 is for mobile home insurance.
- HO-8 is a modified type of homeowners’ insurance for homes older than 40 years and only provides limited protection.
All these coverage levels have different inclusions and exclusions regarding your home and personal property coverage. As such, you should understand each level of coverage to ensure it delivers the value and protection you require. For example, does your homeowners’ insurance cover mold? What about medical expenses if someone is injured on your property? These nuances are important to know when selecting an insurance company and getting a homeowners’ insurance quote.
2. Policy Details May Vary
Once you have selected your homeowners’ insurance coverage levels, you must assess the homeowners’ insurance policy details. Ignoring this part can lead to making wrong decisions and regretting them later. Ensure you understand the terms of the policy effectively. Insurance companies will use terms such as deductible, liability coverage, premium, personal property, and replacement cost.
Know what these terms mean and make sure you understand them before signing on the dotted line. Remember, the terms may work differently for different insurance providers. Go through the homeowners’ insurance policy and ask relevant questions and interpretations. This way, you will avoid paying high premiums for the wrong policy.
3. Compare Different Rates and Coverage
Homeowners’ insurance coverage is different for everyone, which is why you need to get multiple homeowners’ insurance quotes. For instance, you will require more coverage when building new construction in Pennsylvania than buying a built one. The home features in your property will also attract a different coverage level. Also, insurers charge differently for new home development coverage. Each homeowner insurer will also have a different premium from their counterparts.
In this essence, it is essential to compare the various coverage and rates available in the market. Get a few homeowners’ insurance quotes to assess each insurance company’s rates, coverage, and policy terms. This information lets you easily choose the right real estate property coverage.
4. Know the Claims Process
Building new construction in Pennsylvania is an incredible accomplishment for any homeowner. Nevertheless, one unexpected disaster or mishap could easily render all the hard work useless and leave you with serious losses. With comprehensive homeowner insurance coverage, however, you can rest assured knowing that whatever may happen, your homeowners’ insurance policy will provide dependable protection – particularly if it comes equipped with quick and easy claims processing procedures.
It is essential to understand the insurance company’s claims process after any incident. Two policies may have identical coverage amounts but offer varied compensation. Ensure your insurance agent explains every detail to you and clarifies if a portion of the entire claim will be given upfront. Knowing exactly how they plan on making settlements post-loss can help save you from future inconveniences and worries.
If your insurance agent can’t provide an adequate response, looking into working with different insurance companies might be beneficial. That way, you’ll have total peace of mind about what happened and feel confident in knowing your personal belongings and new home are covered should something happen.
5. Consider the Actual Value, Not the Replacement Cost
Another vital aspect you need to know when buying insurance for your home is the options available for coverage. Homeowners’ insurance will offer actual value or replacement cost options. You need to know how the two options differ.
When choosing coverage for your dream home, always consider the actual value. This option bases your premium and claims on your property’s current worth. In case of a disaster, you will receive an amount corresponding to what your property would be worth if you offered it in the homes for sale market.
Looking for New Construction in Pennsylvania?
In a word, understanding the homeowners’ insurance when considering new construction homes in Pennsylvania is essential. Knowledge about homeowners’ insurance policies will help you make wise decisions that guarantee peace of mind should anything happen.
If you have challenges understanding various homeowner insurance policy terms, Burkentine Builders are here for you. Contact us today for assistance with owning a home and getting the right insurance coverage.